2013 M&amp;A Update

Schmid, Alexandra S.; Sánchez, Carol M.; Goldberg, Stephen R.

doi:10.1002/jcaf.21822

Cited by 3 publications

(1 citation statement)

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“…In 1996, $650 billion (USD) was invested in mergers and acquisitions (M&A). The total amount was up to $861 billion in 2009 (Schmid et al, 2012) and dramatically increased to $1,114 billion by 2011 (Schmid et al, 2013). There are many reasons for evaluating a business, but in most cases it is required to obtain an impartial value of the business.…”

Section: Introductionmentioning

confidence: 99%

Valuing Private Companies: A DEA Approach

Anadol

Joseph

Simak

et al. 2014

IJBM

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Traditionally, company valuation methods are based on discounted cash flows, market prices, comparable sales and even liquidation values, but these are known to have a number of shortcomings. The application of data envelopment analysis (DEA) to finding companies comparable to the one under examination and thereby predicting the market values of such companies can be considered to be an extension of the market-based approaches. As a result of using DEA, companies are classified into either an "inefficient" or "efficient" group, for each of which we assume that a corresponding upper or lower bound of its market value exists, respectively. Furthermore, the market value of an inefficient company is expressed in a form of a range of values, which are calculated by utilizing firm's reference set defined by DEA. As the validation to the modelling part, inefficient companies correctly classified their market values into the evaluated variation range up to 36.93%, and 66.20% of the actual market values are below their upper bounds. On the other hand, 41.67% of the time DEA can find a lower bound of their market values for efficient companies based on inefficient peer comparisons. The results show that using DEA in valuing private companies is a relatively advanced method, and could prospectively play an active role in company valuation.

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Section: Introductionmentioning

confidence: 99%

Valuing Private Companies: A DEA Approach

Anadol

Joseph

Simak

et al. 2014

IJBM

View full text Add to dashboard Cite

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How to Predict the Market's Reaction When You Announce an Acquisition

Jansen¹,

Stuart

2013

J Corp Accounting Finance

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Successful M&A activity depends on carefully integrating the target firm into the acquirer. But it is also im‐portant that CEOs, CFOs, and top financial officers be prepared for the stock market's immediate reaction to an M&A announcement. This reaction is not always positive. But what factors actually determine the stock market's reaction? The authors of this article reveal what they are‐because executives who know what to expect will be better prepared to answer questions from the media, analysts, and investors. © 2014 Wiley Periodicals, Inc.

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